Warehouse Solar Case Study: Inside a 5-Year Payback
Abstract percentages don't make the case for commercial solar — a line-by-line breakdown does. Here's a representative 700 kW rooftop project on a mid-size distribution center, modeled end to end, that reaches payback in about five years and clears well over a million dollars in net savings across 25.
The Facility
Our example is a 120,000 sq ft distribution warehouse with a roughly $9,500 monthly electric bill — a typical mid-market logistics building. Its flat roof easily hosts a 700 kW array, and daytime operations mean most of the generation is consumed on-site rather than exported.
At commercial scale, installed cost runs far below residential. Where a homeowner pays around $2.95 per watt, a project this size installs closer to $1.40 per watt, putting gross system cost just under a million dollars before any incentives.
The Federal Stack
The project qualifies for the Section 48E Clean Electricity Investment Credit. Because it's under 1 MW (and would meet prevailing-wage rules regardless), it earns the full 30% base credit — roughly $290,000 against a $980,000 system. Add the domestic-content or energy-community bonus and that figure climbs by ten percentage points each.
Then comes depreciation. Solar is 5-year MACRS property, and with 100% bonus depreciation the business deducts the full depreciable basis — system cost minus half the credit — in year one. At a combined ~26% tax rate, that shield is worth roughly another $215,000. Between the credit and depreciation, federal benefits alone cover more than half the project before a single kilowatt-hour of savings.
The Energy Savings
A 700 kW array in this climate produces on the order of 900,000 kWh a year. Offsetting consumption at a commercial rate, that's roughly $110,000 in first-year energy savings — and it grows as utility rates inflate, even as panel output degrades a fraction of a percent annually.
If the site adds storage to shave its monthly demand peaks, the demand-charge savings stack on top. For a facility where demand charges are a meaningful share of the bill, that addition can shorten payback further while adding outage resilience.
The Payback Math
Net cost after the 30% credit and depreciation lands near $475,000. Against roughly $110,000 of first-year savings that escalates over time, the project crosses breakeven in about five years — and the panels keep producing under 25-year warranties.
Over the full system life, cumulative net savings clear seven figures. The energy-community or domestic-content bonus pulls payback under five years and pushes lifetime savings higher still.
What Makes or Breaks It
Three things move this analysis most: the utility rate (higher rates shorten payback), the demand-charge structure (which determines whether a battery earns its keep), and timing against the begin-construction deadline that governs the most favorable credit treatment.
The numbers here are a model, not a quote — but they're generated by the same engine behind SolarIQ's commercial calculator. Plug in your own bill and state to produce the equivalent breakdown for your building.